By Gavin Mee, Senior Vice President and Head of UK, Salesforce
Many of the large brokers I meet are concerned about these startups eating their lunch. A PwC study found that 48% of the industry thinks that insurtech companies could take as much as a fifth of their business over the next five years, while 69% are worried that the rise of these startups will lead to a loss in traditional insurers’ market share.
So far, the bulk of global insurtech investment (59%) has focused on the US market, but the UK is catching up fast. This year, investment in startups here tripled from 2016, and the UK now makes up 5% of the worldwide total – the same as China.
Looking at these figures, it’s easy to understand why traditional insurers might feel threatened by new players. However, it certainly isn’t time to give up yet. There are many ways for traditional firms to leverage technology and other tools to innovate the customer experience.
Making AI work for you
New insurtechs are successful because they are making the customer experience much more convenient, and data is at the heart of these efforts. Fortunately, customer data is something that traditional insurers aren’t short of and, if they put the processes in place to open it up to better understand their customers, the volume at their disposal should allow them to outmuscle the startups.
More than $1.35bn has been invested into insurance-focused AI startups over the past five years – and with good reason. Imagine receiving a notification from your broker saying that thanks to your safe driving over the past year, an alternative policy is now a more cost-effective and beneficial choice. By analysing the data they have, insurers can proactively help their customers choose the right level of cover and cost.
Artificial Intelligence can automate this kind of analysis at speed to deliver useful predictions and solutions. For instance, using weather data coming into the system, AI software is able to identify if a hail storm is heading towards North London. It can then quickly match this information with relevant customer data - who is in the area and typically parks their car outside - to automatically warn customers of the storm via the communication channel of their choice.
This scenario is a double win for insurers. If customers are given warning of the storm and are able to protect their cars, the insurer will save on potential claims. Perhaps even more important, though, is how this piece of smart and proactive advice transforms the way a consumer views their insurance provider. This is where the true long-term value of these technologies lies, and where the traditional insurers hold all the cards − if they can make use of their data by opening up systems and processes internally.
Let the data flow
IT and customer systems in large insurance brokers have often become complex over time, with data spread across different databases as firms have grown both organically and through acquisitions. It can be tough to make that knowledge accessible and therefore useable. By connecting all the information, brokers can more easily implement new technologies like AI, while at the same time drawing better insights from their data.
Stay true to the brand
When confronted by younger startup rivals, it can be tempting for established brands to try to change their positioning. But I believe that this isn’t always the right approach – it’s more important to show consumers that you have the tools to make their lives easier than to simply tell them.
The scale and the resources available to larger insurance brokers works to their advantage here. For example, 77% of consumers aged 25-34 want to use their smartphones for purchasing insurance – but only 11% are currently doing so. There’s clearly a big opportunity to invest in these kinds of apps and services. Perhaps more surprisingly, there is a further 57% of consumers in the 55+ category wanting to buy insurance on their phone. Thus it becomes even clearer that focusing on the development of new offerings is crucial.
According to Accenture’s ‘ The Rise of Insurtech’ report, 86% of insurers believe that they must innovate at an increasingly rapid pace simply to maintain a competitive edge. Traditional insurance brokers own the data that enables them to do this. In order to harness it, they should focus on turning this wealth of information into predictive and helpful services that show they’re on the customer’s side. By adopting this relentless focus on customer satisfaction, powered by data and technology, traditional firms can shrug off the challenge of their younger, more nimble rivals. |
